Which of the following is NOT true regarding accrual-basis accounting?
A) A company records events that change its financial statements in the periods in which the events occur.
B) Revenues and expenses are recognized in the periods in which the company receives or pays cash.
C) It has greater potential to depict meaningful trends in revenues and expenses.
D) Revenues and expenses can be more easily related to the economic environment of the period in which they occurred.

Question

Quizplus · Accepted Answer

Accrual-basis accounting is based on recognizing revenues and expenses in the periods in which they are earned or incurred, regardless of when cash is received or paid. Therefore, option B, which suggests that revenues and expenses are recognized when cash is received or paid, is not true regarding accrual-basis accounting.

Which of the Following Is NOT True Regarding Accrual-Basis Accounting